Halfords autocentres drive growth but cycling curbs retail

The retailer posted like-for-like sales growth of 7.8%  for the 20 weeks to August 18, 2023, with total revenue growing 14.1%.

Revenues at its autocentres increased 34.6%, while retail revenues edged up 3.7%, with like-for-like sales for the division up 3.4%. 

The retailer said “needs-based” products supported the majority of the like-for-like sales growth for motoring products (up 7.5%), but cycling, car cleaning and touring ranges were hit by poor summer weather and low consumer confidence. 

As a result, revenue from its cycling ranges dropped 1.7%, like-for-like sales were down 2.7% and it now represents 25% of the group’s total revenue. 

In a statement to markets this morning, Halfords said market conditions were varied, and its services division had performed more strongly than it had anticipated (up 6 percentage points year on year) and it now accounts for 48% of group revenue, but tyres, motoring products and cycling had been “tracking behind”.

B2B sales accounted for 29% of group revenue (up 5 percentage points year on year), benefiting from the Cycle2Work scheme and Commercial Fleet Services – the latter boosted by a contract win with Yodel to service its UK truck and van fleet. 

It also said a cost and efficiency programme was on track to deliver a year one target of £30m across product cost and operating cost reductions, and its loyalty scheme Motoring Loyalty Club was performing strongly,  now exceeding 2.5 million members who were spending £266 more per visit than non-members. 

It noted that its strong market share performance had helped mitigate the “market under-performance” and trading had been in line with expectations, therefore full underlying profit before tax is expected to be between £48m and £58m.

As it stated in June, underlying profit in H1 is expected to be significantly below last year, due to changes in the valuation of foreign exchange contracts and the results of cost savings not expected until the second half. However, it expected profit in the second half to be significantly ahead. 

Halfords chief executive Graham Stapleton said: “It’s been a good start to the year for Halfords, and our ongoing focus on essential maintenance and servicing is driving a strong performance in our autocentre and retail motoring business.

“Group motoring, which now accounts for over 75% of our total sales, is a resilient sector and we’re progressing with our long-term plans to become a one-stop-shop for motoring ownership.

“We’re continuing to do everything that we can to support our customers through the cost-of-living crisis and are determined to offer them unrivalled value.”

The retailer is set to launch a new campaign to promote its servicing and repair offer. 

Stapleton added: “Our research shows that motorists who use manufacturers’ franchised dealerships can pay over 50% more for repairs compared with Halfords.” 

“With the average cost of car ownership pushing £300 a month, the last thing hard-pressed motorists need is to pay over the odds for repairs. That’s why we’re launching a campaign called Dealer or No Dealer, designed to raise motorists’ awareness of the choice and cost savings available to them for servicing and repairs, and that any work carried out by Halfords will not affect their manufacturer warranty.”